Car Loan Traps You Should Avoid

A car loan from a dealership is quite popular because it’s easy, convenient, and most car salespeople are just so tenacious that it’s hard to say no. Dealerships are determined that you get a car loan from them in order to make the sale and make a profit. Sometimes, they resort to tricks in order to get you to spend more money. They best way you can avoid their money traps is by educating yourself. Once you recognize these traps, you’ll be able to avoid them and have more control over the terms of your car loan.

Here are some of the common car loan traps that dealerships use to get more of your hard earned money.

Common Car Loan Traps

• Asking for your credit report even when you’re paying cash. In our current financial climate, cash is king. You can get the best deal anywhere if you can pay for your car in cash. Any dealership should sell you a car even without your credit score especially if you’re paying in cash. Asking for your credit report is just an excuse for them to look into your credit score in order to convince you to finance a car loan with them. It’s also risky for you because every time you check your credit score, it can actually make it decrease. So don’t let the dealership bully you into sharing your credit report.
• Not calculating the total financed amount correctly. Some car dealers will intentionally leave out rebates, trade-in, and the down payment on the sale price of your car in order to get more money from you. Make sure to that they apply these to your bill; check and double check to make sure you’re getting a fair deal.
• Additional Dealer Mark-ups (ADM). Additional dealer mark-ups are things such as dealer preps, rust proofing, or undercoating that they automatically factor in the sale price of your car. None of these things are required and you can have them taken out of the final price of your car. Dealers just preprint these in your form hoping you wouldn’t notice and that you’ll pay them without question. If you see these mark-ups on your car loan form, you can demand that they reprint a new form without it. It’s your right and you’re entitled to it.
• Spot Delivery. Spot delivery is one of the most underhand things dealers do to squeeze more cash out of you. What happens is that they take advantage of your excitement and send you home with your car without signing the final contract for your car loan. Then they’ll call you to renegotiate on a different contract. You wouldn’t be able to fight it because you weren’t able to finalize the contract before you took the car. The dealer could demand a higher down payment, or increase your monthly payment and interest rates. Always make sure you understand every detail of your contract, and that you sign and finalize everything before driving off with your car.

Tagged as: car, consumer rebate, credit, down payment, finance, graduate, loan